Target: ₹71.10

CMP: ₹65.53

In Q4-FY25, IDFC First Bank Ltd reported strong growth in its loan book, rising 20/5 per cent on a y-o-y/q-o-q basis, with the retail segment growing at 16/4 per cent on a y-o-y/q-o-q basis and contributing about 69 per cent of the total loan book during the quarter.

Within the retail segment, growth was primarily driven by the mortgage and auto loan categories, while the credit card and education loan segments continued to grow by over 35 per cent on a y-o-y basis. In line with management guidance, deposits grew faster than the loan book, rising 26/6 per cent on a y-o-y/q-o-q basis, primarily led by term deposits, which increased 26/9 per cent over the same period.

Credit costs remained elevated at about 2.46 per cent for FY25, impacted by stress in the MFI segment and a one-off hit from the Mumbai toll account. Consequently, PAT declined by 58/10 per cent on a y-o-y/q-o-q basis. Excluding the impact of the MFI segment, asset quality improved sequentially.

We have revised our estimates and maintained our Neutral rating on IDFC First Bank Ltd, with a revised target price of ₹71.1 (1.3x FY26E adjusted book value). We expect the Bank’s profitability to improve meaningfully in FY26, driven by normalisation in credit costs, moderation in operating expenses, and steady business growth.

Published on May 6, 2025